B+P Insights: Investing in people – your biggest asset

HR insight / Terhi Lindgren, SSP Finland
I work as an HR Director in the restaurant business, which in Finland is one of the sectors that has a high turnover and a constant shortage of good employees – cooks alone are next to impossible to find in this country.

I have always thought this might be something specific for Finland, but then I talked to our Group’s MD in China a couple of years back – one of his big worries was the lack of skilful employees.. In China! I couldn’t imagine it, with the millions of people there. The explanation was logic – for centuries, China has been an agricultural society. Finding people with foreign language skills to work in the big cities in the service industry can prove to be quite challenging at times.

A couple of years ago I had the pleasure of attending an Executive HR course at Aalto University, where I got to enjoy the lectures of excellent professors from different countries. One lecturer from the US told about the lack of talent in the US and all companies fighting for the same talents – the same story there, too.

This makes me wonder, how it is possible that some companies still feel they can afford not to invest in their people. If you Google the phrase: “Our people are our greatest asset” you get millions of hits. Every company has this phrase on their mission statement, vision or annual report. Yet what do companies do, when the going gets tough? They hold union labour negotiations (YT-neuvottelut) to make people redundant, they stop training their staff, they take away all benefits. And what happens 6 months, a year, 18 months along the line? They have a shortage of staff, and when sales go up, they spend fortunes on recruiting, inducting and training new staff to ensure the delivery to their customers… A vicious cycle.

HR people are partly to blame – HR Managers and Directors need to learn how to justify HR actions through Euros spent and Euros saved. Does your HR Manager know the cost of one new recruit? The cost of turnover in your company? The cost of a sickness day? If not, they should calculate it, today. Then they should sit down with Operations and figure out what to do to lower turnover and sickness rates and grow the retention rate. For most companies, the cost of labour is the biggest cost, which is why they should not be indifferent as to what the costs are. Here’s an example:

In 2009 – 2010, our company faced difficult times: the recession hit hard and we had tough decisions to make.

The easiest thing of all would have been to start letting people go. We thought about it – many other companies did. But we decided not to. Instead, we decided to negotiate changes into our labour scheduling system to get some more flexibility into working hours, and we launched a big wellbeing program together with the most extensive training program the company had ever seen, to train our staff into better professionals in customer service and especially in sales.

Why? Because we knew, that if we would let people go, within a year’s time, we’d be wondering where to find new people to replace them. We would spend thousands on inducting them, and training them, and it would take at least a year for them to reach an adequate level of great customer service.

So what did we do? We negotiated a more flexible shift scheduling system, allowing us to use the hours when business is really busy, and have people go home when it is really quiet. In the restaurant business, this luckily is easy to do, through an 18-week balancing system. Today we give all overtime as days off, not paying 50 % and 100 % overtime pay.

We launched a wellness program to monitor and lower sickness rates. Through various activities, we started making people aware of their own wellbeing, and took an active role with the ones who were away a lot on sickness leave. We started distinguishing between being sick and being unable to work – eg. in family crisis a person is naturally unable to work, but not necessarily sick. So we encouraged people to first talk to their managers, and we engaged our managers to give time off, make special working arrangements and easier work schedules when needed. We started a weight watching group, a quit smoking group, yearly physical testing…. All to make a person think of how they are coping with their work-/private life balance.

And the results?

In 2006, the sickness rate of the company has been over 6 %. Last financial year ended at 3,21 %. In days it means, that before people were away appr. 11 days per year sick, last year 8 days. A saving of 3 days per person and all costs related to sickness (company healthcare, hiring temporary staff etc), saves us ca 150.000 Euros p.a.

Our staff turnover rate in 2007 it was 44 %,. Out of 300 people, 130 came and went. One recruitment cost us ca 800 Euros – so hiring 130 new people costs around 104.000 Euros. Last year our turnover was around 15 % – so about 85 people less than in the worst years. Definite savings!

Saving around 210.000 Euros a year is something our company decided we cannot afford not to do. Can you afford it?

With Best regards,

Terhi Lindgren

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